Now No. 2, Apple Tries Harder

A new boss cuts prices, trims management and plans more models

Over four days last week, 1,500 computer dealers in 25 U.S. cities listened to pep talks from John Sculley, president of Apple Computer. He showed them new television commercials, answered questions and announced that this week the Lisa computer, which sells for $9,995, will have a new stripped-down price of $6,995. The price cut for the Lisa, introduced last January with much fanfare, marks another skirmish in the war between Apple (estimated 1983 sales: $1 billion) and IBM (estimated 1983 sales: $40 billion) for the personal-computer market.

In the past year, the position of the two combatants has dramatically reversed. Last December Apple held a 21% share of the market for computers costing $1,000 to $5,000, while IBM had just 12%, according to Dataquest, a California research firm. Today Apple remains at 21%, but IBM has 28%.

While IBM has a buttoned-down management style that has been fine-tuned for nearly 60 years, Apple, which is just 6½ years old, is undergoing rapid change. The company is being transformed from an upstart entrepreneurial firm to one that marches to the beat of professional managers. The changes are coming at a time when the high-flying personal-computer industry is suffering its first major bankruptcies (see box).

Directing the developments at Apple is Sculley, 44, who in April was lured away from a job as president of Pepsi-Cola with an offer of $2 million for his first year at work. Sculley has been arriving at Apple headquarters in Cupertino, Calif, as early as 7:30 some mornings and setting a pace that many of the young executives have had trouble maintaining. Though he occasionally discards his preppie suits for open-necked shirts and rumpled slacks, he has been trying to instill discipline and induce a streak of humility in an organization where confidence bordered on arrogance.

Part of Sculley's task has been a realignment of Apple's top management. Since he took over, three vice presidents have been asked to leave and one has been replaced by a senior marketing man from Eastman Kodak. Earlier this month, Sculley requested the resignations of 30 staffers. Says one Apple programmer: "They've been telling people they have two choices. They've got five days to resign, or they're going to be put in a job for which they're unqualified, unsuited and ill-equipped—and then fired."

Cutting prices and shrinking the staff are not Sculley's only tactics. He is also planning new products. On Jan. 18, Apple will introduce a computer code-named the Macintosh. Developed by a group headed by Company Co-Founder Steven Jobs, the Macintosh is based on the technology developed for the Lisa but will sell for only $2,500. Experts estimate that Apple will sell 350,000 Macintoshes next year, in contrast with 46,000 Lisas. Says Analyst Michelle Preston of Wall Street's L.F. Rothschild, Unterberg, Towbin: "Mac is the future of Apple."

The company is also working on a simple, low-cost version of its best-selling Apple IIe. The Apple IIe would compete directly with the cheaper model of the IBM PC, which may be introduced next month.